The newly strengthened India-US relations seem to be overshadowed by Delhi's insistence on using diplomacy to resolve the Iranian nuclear controversy.

At the current board meeting of the International Atomic Energy Agency (IAEA) in Vienna, the United States, Germany, France and Britain are lobbying hard to report Iran to the UN Security Council for its nuclear activities.

Diplomats say they have distributed a draft resolution to the board and it is expected to be voted on later this week.

However, the US-led initiative may not have the required majority as countries like Russia, China and India have expressed their reservations over referring the Iran issue to the Security Council.

India cannot sit on the fence anymore. It may have to make a choice. Either way it is going face problems

Professor P R Kumarasamy, Jawaharlal Nehru University

India, whose support for the resolution is considered to be crucial, wants to give more time for Tehran and use diplomacy to resolve the nuclear controversy.

Precarious situation

But Americans seem to have been taken aback by New Delhi's stance.

"If New Delhi decides to vote against the resolution that would definitely put obstacles at least in the nuclear deal signed in July 2005," says Henry Sokolski, executive director of the Washington-based Non-proliferation Policy Education Centre.

After decades of mutual suspicion during the Cold War, India and the US signed a landmark nuclear deal in July.

The pact allows Washington for the first time to help India's civilian nuclear programme, even though India is not a signatory to the Nuclear Non-Proliferation Treaty (NPT).

In addition to the nuclear deal, the two countries have also agreed to cooperate in defence and space programmes.

India felt its ties with the US had entered a new phase. But the Iran issue has come as a jolt to both sides.

Earlier this month the Bush administration came under strong criticism from some members of the US Congress for the proposed nuclear deal, which requires the Congressional approval.

Now New Delhi is in a precarious situation. After obtaining nuclear weapon capability in 1974, India may not have the moral right to ask Iran to give up its nuclear ambitions.

But at the same time, it cannot afford to risk the ire of the US and the European Union by siding with Iran.

The reality for India is that it is struggling to meet its energy demands.

It currently imports 70% of the crude oil it needs and its energy demands, both in oil and gas, are expected to double by 2020 as the country's economy grows rapidly.

Gateway

India needs energy-rich countries like Iran.

Earlier this year, Iran and India signed a $22bn deal for Tehran to supply five million tonnes of gas a year to India.

The proposed gas pipeline project is expected to come through Pakistan.

Iran insists it wants civilian nuclear power, not weapons

For months, Washington has been conducting behind the scenes diplomacy with India, urging it to rethink such ambitious projects with Iran. So far, Delhi has not given in to the US pressure.

Analysts say that India-Iran relations have been steadily evolving over the years.

A declaration in January 2003 clearly states the intentions of the two countries for a strategic partnership. In that sense, India's current position should not come as a surprise.

Nevertheless, India's options seem to be extremely limited.

"India cannot sit on the fence anymore. It may have to make a choice. Either way it is going face problems," says Professor P R Kumarasamy of the Jawaharlal Nehru University in Delhi.

With nuclear power accounting for only 2.7% of its total energy production, India has more reasons to side with Iran as nuclear deals with the US is not expected to meet its requirement in the near future.

The India-Iran partnership goes beyond the proposed gas pipeline.

India has the second largest Shia population in the world and improving ties with Iran could send encouraging signals for the nearly 20 million Shias in the country.

The two countries have also been stepping up their military co-operation and Delhi is keen to have a foothold in Afghanistan using Iran as an entry point.

If a key planned land route to Afghanistan is completed, Iran could be India's gateway to the land-locked Central Asian countries.

Also, any decision to side with the US could undermine India's position amongst Non-Aligned and other developing countries.

Politically this could be a risky venture for the Indian coalition government as some of the members of the coalition have raised strong objections to the idea.